Singapore Semiconductor Industry Association

ISA Vision Summit 2013 Ulf Schneider President, SSIA Managing Director, Lantiq Asia Pacific Pte.Ltd.

Bangalore, 15th February 2013

Title

Semiconductor Growth

the Multibillion Global Jackpot

ISA Vision Summit 2013

Bangalore, 15th February 2013

Speakers Profile

2005-present

President Singapore Semiconductor Industry Association (SSIA)

2006 - 2009

Board Member of Singapore National Research Foundation (NRF)

2010

Member of Singapore Economic Strategy Committee (ESC)

1988-1995

Project Manager with Siemens Semiconductor Group in Munich/Germany

1995-1996

R&D Manager with Siemens Components Pte Ltd in Singapore

1999-2004

R&D Director with Infineon Technologies AG in Munich / Germany

2004 2009

Vice President R&D with Infineon Technologies in Singapore

2005-2006 MD with Infineon Technologies in India

2009-2012

Managing Director with Lantiq Asia Pacific in Singapore,

Taiwan, China, Hong Kong and India

Content

Motivation What is the Rationale behind the Strategy of Governments of the World to

have a Stake in the Semiconductor Industry??

Success Factors & Government Instruments What are the Economic Success Factors of our Industry, which

Governments can influence efficiently and effectively ?

Associations Influence How can Industry Associations step in to further enhance the Situation,

for both the Individual Players as well as the Governments Charters ?

Role Models Which are the other Countries to adequately learn from?

Conclusion & Take-Aways

MOTIVATION ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Scarring-Off Barriers for Countries Semiconductor Success

High Industry Volatility, High Risk.

Highly Competitive Global Landscape.

Low Gross Margins (in most of the Segments).

Low Visibility for Short- and Mid-Term Future.

Extremely high Capital Demand.

What makes the Semiconductor Industry so attractive for Country Economics ?

$0.3 Trillion Industry is hard to ignore

Deterministic, long term, Growth Perspective.

Opportunity to generate high number of Jobs.

Vision to generate high number of extremely high qualified Talents (They make it here, they will make it anywhere ...).

Gain (or keep) Ownership of strategically important Core Technologies . Decrease Dependency on other Countries IP.

Necessary Measure to hold down Trade Deficit Accounting.

Global Semiconductor Impact

The Semiconductor Industry serves as a driver, enabler and indicator of technological progress. Developments in the industry determine the way we work, transport ourselves, communicate, entertain ourselves and respond to our environment.

SIA Semiconductor Outlook and Review - April 2010

COUNTRY SUCCESS FACTORS ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Country Success Factors for the Semiconductor Industry

Government Focus

Human Resources: Low-cost. Highly Educated. Diverse.

Well-connected league of individual Entrepreneurs

Abundant and robust Country Infrastructure

Logistics Excellence

Stable and predictable political and legal Framework

Free from natural Disasters.

GOVERNMENT SUPPORT INSTRUMENTS

ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Government Support

Tax Incentives and other Monetary Benefits.

Provision of Country Infrastructure and Resources.

Support of Free-Trade and Special Economics Zones.

Access to world-class Education and Qualification Systems.

Support to attract foreign Talents.

Government Stakes in Companies and Institutions.

Support and Encouragement of Industry-Clusters.

Protectionism.

ASSOCIATIONS INFLUENCE ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Voice of the Singapore Semiconductor Industry

Support of Business Growth through Sharing of Market Intelligence and Leadership Development.

Support of Cutting Edge Technology & Capability Development.

Support of Talent & Manpower Recruitment and Development.

Communication and Networking beyond Industry Boundaries.

Facilitate close Collaboration between Industry, Research, Education and Government Bodies.

Singapore Semiconductor Industry Association as an Example.

Key Focus Areas

ROLE MODELS ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Taiwan

About: Taiwan represents 70.2% of the worldwide IC foundry revenue and

55.1% of the worldwide package and testing revenue

History: 1960-1980: Prepatory/Seeding Phase

1980-1990: Constant Growth; UMC/TSMC founded out of local Research Institutes

since 1990: Full development of the Industry Cluster in Taiwan

Government Influence: Electronic Industry Development Projects I/II (1976-1983)

Ultra Large Scale Integration Project (1990-1994)

Financing of basic research and institutions like ITRI

Success Factors: Fully equipped industry verticals, from IC design houses to ODMs/OEMs,

focussed on strategic growth areas.

Very good informal networks.

Young population, a good education system and geographically centered in Asia.

Highly-developed network of institutions for collaboration (ITRI)

Source: "2012 Taiwan Semiconductor Overview, Page 3

Israel

Israel

About: Very strong high-added-value R&D orientation as part of the government charter

History: MNC's established R&D centers in Israel in the 70's

Milestones in the development were the establishment of Motorola Israel in 1964,

IBM Israel in 1972 and Intel Israel in 1974

Government Influence: Incubator and venture capital programs (Yozma)

Support of R&D activities via the Office of the Chief Scientist, the 'Law for the

Encouragement of Industrial R&D or the Magnet Program

Success Factors: Well directed government Investments

High education and motivation level

Skilled immigrants

Singapore

Profile of Singapores Economic Development:

Source: Singapore Economic Development Board, 2012

Singapore

About: Export oriented industry with a manufacturing output share of global semiconductor

revenues of 13.5%

History: First assembly and test facilities in the 60's

In the 80's the industry expanded into high-value add operations and growing further since

Government Influence: The Economic Development Board is guiding industry players to Singapore and is

holistically involved in taking care of their needs

Comprehensive incentive programs in place to support set up of R&D, manufacturing

and international HQ functions in Singapore.

Recent: Increased investments in education and talent development

Success Factors: Very good country infrastructure

Talented, diligent workforce

Stable, pro-business government and committed government agencies

Source: Singapore Economic Development Board, Singapore Semiconductor Industry Association, 2012

Mexico

About:

Strong in Electronics Manufacturing Services

E.g. ranked largest exporter of flat screen TVs in 2011 80 percent of the worlds largest manufacturing service suppliers operate in Mexico

History: First Outsourcing activities of US companies started in the 70's

Government Influence: Variety of Government Programs: Refund of Taxes on Imports and Exports, 'Sectorial

Promotion Programm', 'Manufacturing Industry, Bonded Assembly and Export Services'

Success Factors: Low manufacturing costs, approximately 21% less than USA, 11% less than China

and 3% less than India

Good Location proximity to consumer market (US)

Source: Secretea de Econimoia Mexico, 2012

China

About: Strong manufacturing basis

Today 4 out of the 15 largest foundries worldwide are chinese

History: Stage 1: Government run Project 908 in 1990 and Project 909 in 1995

Stage 2: 2000-2003: Episode of major growth, Industry grew from 98 to 463 design

firms also foundation of SMIC / GSMC

Government Influence: Stage 1: Government financed fabs and projects

Stage 2: Opening of the restrictive market allowed foreign companies to enter china

and also domestic companies established

Success Factors: Opening of the restrictive market, attracted private business

Cheap land, skilled labor, reliable infrastructure, tax benefits and a big market

allowed further growth

Source: University of Massachusetts, 2012

India

About: Forecast of electronics market size in 2020: $400 billion

Of that $50 billion expected from semiconductors

Challenge for India: growing demand could result in a growing current account deficit

if not sourced locally

Government Influence: Modified Special Incentive Package Scheme (M-SIPS)

National Policy on Electronics 2012

Possible Success Factors: Large consumer market

Large engineering talent pool

Source: Frost&Sullivan Report, 2012

India

Limitations:

Limited Infrastructure Capabilities:

Electricity & Water

Travel & logistics

Bureaucracy & efficiency of government

agencies

Education and talent development

Critical impact from unions

CONCLUSION ISA Vision Summit 2013 Singapore Semiconductor Industry Association

Conclusion & Take-Aways

Do not try to simply copy from other Countries Success Stories. India is unique. For India, go the India Way.

Take the right Sequence and the right Pace. There is no Fast-Track to Success in our Industry.

Focus on Industry Segments, which benefit India demands immediately: Communication, Mobility, Power Generation, ....

For Government Support: Make sure Support reaches the intended Benefices.

The India Way on Policies: A Proposal A. Government Roadmaps and Policies need to be designed in close

Collaboration with Industry s representation.

B. Progress and KPIs for Roadmap Deployment need to be carefully monitored. Deviations need to be managed. Right Progress needs to be incentivized.

C. Indias huge Network of Entrepreneurs can support the build-up of a good mix of multinational and local Investment, MNCs and SMEs.

D. Indias Growth should be built on Indias Strengths. India is famous for its huge and highly skilled Talent Pool of Engineers.

E. Right Focus and Sequence of Steps. Look first for the Fundaments and then for the Building.

Lets look forward to the Future of Indias Semiconductor Growth. Enjoy with me the Vision of ISA Vision Summit 2013.

Thank You !